Are you talking for the front or rear?
If you're talking rear it replaces your existing differential with one that has the ability to send power to both wheels instead of one. Open differentials are what comes stock in most trucks and causes the one wheel spin problem. The reason why most vehicles have that is as you go around a turn the inside wheel spins slower than the outside wheel, thus at different speeds so they need to rotate independently. A TRUE Locker, locks both rear wheels all the time, so when you go around a turn you get "wheel hop" because they turn at the same speed even tho they are moving at different turn rates around the corner. Get it!
So if you upgrade to a "locker" that does not have limited slip capability this is what you can expect, however offroad traction is unparalleled. The other two options are a clutch type Limited Slip diff, such as I have from the factory. This works the same way except there are springs and clutches that apply power to both rear wheels after one "slips"...not as strong as a locker because I can end up with one wheel spinning as well.
Next step up is the TorSen type that comes in a FX4 LII Ranger...its still Limited Slip but with gears that provide more power and longer life.
Finally there is the new "electric or air" operated locking differential. These are open differentials until you hit the switch and then it "locks" into place...full locker style.
From what I understand the Powertrax is an O.K. unit. If I were serious about offroading I would either get a Detroit Locker (full lock) or an Eaton E-Locker like Griggs got. Thats the way to go.
If you REALLY want to know more go to www.howstuffworks.com
they have a cool little pictorial of how the differential transfers the power.